In partnership with ClimateSeed and AXA Seguros Mexico, AXA Climate has developed an innovative parametric insurance product to protect the community of fishermen responsible for the restoration of San Crisanto mangrove forests against the impacts of hurricanes. In the event of a natural disaster, this insurance guarantee will play an essential role by facilitating rapid financing in order for damaged mangrove forests to be restored, as well as the repairs of related infrastructure linked to fishing or ecotourism.
The key role of mangrove forests
Mangrove forests are abundantly rich ecosystems which play a key role in addressing the challenge posed by climate change. They reduce the impact of coastal flooding and support areas very rich in biodiversity (crabs, molluscs, fish, birds, etc.), which protects and provides for local communities. Furthermore, they are powerful carbon sinks, storing up to four times more carbon than tropical forests.
However, today mangrove forests are being undermined by fish farming, coastal urbanisation, pollution and natural disasters (tropical cyclones, storms, erosion, rising sea levels…). It is estimated that more than 35% of mangrove forests have disappeared during the course of the last twenty years, even reaching more than 70% in certain areas.
The San Crisanto project
San Crisanto is a community of fishermen made up of approximately 150 Mayan families within the Yucatán Peninsula. Beyond fishing, their economic activity has been structured around 800 hectares of mangrove forest through restoration and conservation activities financed through the sale of carbon credits, as well as the development of ecotourism.
Faced with increasing climate pressure, the San Crisanto mangrove forests are highly exposed to natural disasters. Accordingly, in 2002 Hurricane Isidore destroyed 99% of the area’s mangrove forests, causing significant flooding and bringing local economic activity to a halt.
The San Crisanto mangrove preservation and restoration project has delivered numerous benefits to local ecosystems. In close collaboration with local communities, this project has successfully captured approximately 47,908 tonnes of CO2 over four reporting periods, while still encouraging the implementation of a community-based sustainable development programme, together with new sources of income. This assisted natural regeneration initiative represents a clear example of the ability of mangrove forest preservation and restoration projects to develop into viable offset projects that are able to support both local communities and natural habitats.
In order to strengthen the resilience of this ecosystem and the local communities who rely on it, AXA Climate – in partnership with AXA Seguros Mexico and ClimateSeed – has developed a parametric insurance product specific to the project’s requirements. So how does it work? As soon as a hurricane sweeps through the protected area, compensation of up to 100,000 dollars is triggered automatically. Its amount varies according to the wind strength and proximity to the core of the protected area.
Compensation will be sent straight to the policyholder, namely the local community, in order to support repair efforts following on from damages caused by the hurricane. This process will support the regeneration of a thriving ecosystem while still ensuring the sustainability of the carbon offsets which are associated with it.
‘‘This instance of inter-company collaboration between AXA Climate, AXA Seguros Mexico and ClimateSeed represents a great example of synergy’’, states Antoine Denoix, CEO of AXA Climate. ‘‘With this initial parametric insurance guarantee hinging on the restoration of mangrove forests, we’re taking an innovative step to serve local communities whose survival is intrinsically linked to these forests.’’
“Parametric coverage has been very useful in Mexico to provide resources and face natural disasters. During Hurricanes Otis and Lidia, the small businesses covered under Ayuda Express Huracán received $10,000 MXN within 72 hours, and more than 1,430 farmers received $2,200 MXN per hectare damaged during Hurricane Agatha in 2022. These are examples of how this type of insurance responds quickly to the needs of the clients”, said Daniel Bandle, CEO of AXA Seguros Mexico.
According to Sébastien Nunes, Chief Executive of ClimateSeed, ‘‘Since 2020, ClimateSeed has been a partner of the San Crisanto Foundation, to which it has provided its support through providing the necessary financing for the project. Thanks to the collaboration with AXA Climate and AXA Seguros Mexico, we are today celebrating a new phase in the partnership which will enable the Foundation to further overcome the financial obstacles and continue with its commitment to the conservation and restoration of mangrove forests.’’“Our commitment as a community to nature commits us to putting our greatest effort and always looking for better alternatives for its conservation. Our mangroves are the essence of the community, without them San Crisanto disappears. Insuring the mangroves strengthens its permanence and gives more certainty to San Crisanto.”, adds José Inés Loría Palma president of the San Crisanto Foundation.